One-month LIBOR is at 0.17 percent while the one-month Treasury bill is trading at 0.26 percent. The liquidity providers — institutional money — may chase better returns knowing the US will make good and pull out of buying short-term commercial paper.

This short paper squeeze, which is used by many corporations to fund day-to-day operations was the scenario that was the cause for the TARP bailout.

Cratering stock prices be damned, if the commercial paper market is squeezed on yield, then publicly trade companies will be showing up at the Fed window again in order to make payroll, pay vendors and roll over shorter duration notes.

This can all happen sooner than next week, look for 0.35 1-month T-Bill to be the line in the sand for the first shoe to drop perhaps as early as tomorrow.